Trading Glossary: L

These are common terms used in the financial services industry

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Last dealing day: The last day on which you may trade in a particular market. This may or may not coincide with the settlement date for that market.
Leverage: Leverage allows traders to gain a large exposure with a relatively small outlay. This has the effect of amplifying profit or loss. A leverage of 1:100 means that in order to open and maintain a position the necessary margin is one hundred times less than the transaction size.
Libor (London InterBank Offered Rate): The interest rate charged between banks in London for short-term loans and a key benchmark that influences many other interest rate charges/products. Individual currency denominations have an associated Libor. It is produced for ten currencies with 15 maturities quoted for each, ranging from overnight to 12 months, producing 150 rates each business day.
Limit order: A limit order is an order to buy or sell a product at a specific price. A limit order to buy at a target price with CMC Markets is executed at the target price or lower, when the buy price is equal to or lower than the target price. A limit order to sell at a target price with CMC Markets is executed at the target price or higher, when the sell price is equal to or higher than the target price.
Limited risk: A trade which has a strictly limited maximum loss. Also see Controlled risk.
Line charts: Line charts are created by connecting a series of data points, usually past price closes, with a line. They are the most basic type of charts used in financial markets.
Liquid market: A liquid market has sufficient volume of two-way business for a large transaction to occur with little or no impact on price. Such a market will normally exhibit tight bid-offer spreads.
Liquidity: The level of continual buy and sell activity making up market demand and indicating the ease with which investors can undertake transactions.
Liquidity providers: A liquidity provider is an individual or institution which acts as a market maker in a given asset class. In the world of Forex the majority of global liquidity is provided by a number of big name investment banks (referred to as Tier 1 liquidity providers).
Log file: An ongoing journal of your trading activity.
Long position: A position taken in anticipation of a rising market. To go long means to open a ‘buy’ position.
Long-term trading: In the context of CFDs, longer-term trading refers to strategies where the average duration of open positions would be between a week and several months.
Loonie: A slang term for the Canadian dollar.
Lot size: It is the standardised quantity of a financial instrument, such as base currency, underlying asset or shares, per contract.